Technical expertise will only get you so far on your journey to asset optimization. For an organization to succeed in enterprise asset management (EAM), it must have leaders that demonstrate knowledge in the three disciplines of safety, reliability, and maintenance. They must also understand how integrating these disciplines is the key to improving operational performance.
If you’re an organizational leader that needs to expand or refresh your knowledge in asset management, you’ll find the white paper on 9 Laws of Enterprise Asset Management valuable in building the foundation needed to maintain safe and reliable operations. Preview the laws of enterprise asset management below and dive into the first law: protect people, to start your journey towards asset optimization.
The 9 Laws of Enterprise Asset Management At-a-Glance
Following these nine laws unlocks a high potential for asset optimization. Leaders that understand these principles and practice them at their organization can see significant returns that reduce downtime, increase productivity, and improve safety.
1. Protect People
2. Know the True Goal
3. Obsess Over the Basics
4. Embrace the Technology
5. Focus on Returns, Not Costs
6. Optimize the Critical Path
7. Foresee the Catastrophe
8. Ensure Reliability or Redundancy
9. Calculate Coldly
View the infographic for a summary of each law.
Law #1: Protect people
As seen in his series of I, Robot books, science fiction writer Isaac Asimov promulgated three laws of robotics. The first law states, “A robot may not injure a human being or, through inaction, allow a human being to come to harm.” Asimov’s first law is a worthy guide for the first law of enterprise asset management: protect people.
EAM is designed to make life better for people – to reliably produce and deliver higher-quality products at lower prices and thereby improve people’s standard of living. That mission is abrogated if, in the process, we hurt people. Protecting people means not just looking out for the immediate health and safety of employees working around the assets, but also those who live nearby or downstream from a facility and the environment on which we all depend.
There are situations where the optimal strategy includes “run to failure” or RTF. Most people treat the lightbulbs in their house this way, replacing them only after they go out and have no useful life remaining. In a production facility, all other things being equal, running to failure can be more efficient if shutting down a line for maintenance creates the same downtime costs as a failure without a compensating increase in service life. And every component carries some probability of failure during its service life, either early on if it has undetected defects or later in the cycle as it ages and accumulates wear.
These are risks inherent to the production process. However, certain breakdowns have the potential to injure or kill workers or people in the area surrounding a facility. Others simply violate regulations or the law and subject the company to fines, lawsuits, and damage to its reputation.
Regardless of the work activity or task, protecting people should always be the priority. No matter how much a work task or activity can promise to improve uptime, efficiency, and profitability, it will always be overridden if following it creates a meaningful risk of injury or illness to the people in or around the area.
Setting the Foundation for Asset Management
Law #2: Know the true goal
Sound EAM decisions are driven by “the goal.” No asset exists in isolation. Rather, each asset should be managed according to its contribution, or potential contribution, to the larger objectives of the system. As ISO 55000 states, “What constitutes value will depend on these objectives, the nature and purpose of the organization, and the needs and expectations of its stakeholders.”
In practice, this principle means that identical assets in two differently configured systems may need to be managed differently.
- They may be run at different speeds or over a longer part of the day.
- Their software may be upgraded at varying times or they may be maintained at different intervals, as long they don’t create a hazard.
- They may even be given substantially different asset life cycles, depending on what role each of them plays.
Nearly every decision about the management of an asset is properly determined by asking, “Does this maximize the productivity of the system?” instead of, “Does this maximize the output of the asset?”
Law #3: Obsess over the basics
People who show up ill or sluggish to their doctors’ offices expect to walk out with a prescription, preferably the latest and greatest intervention. What every medical professional understands, but struggles to communicate to their patients is that sophisticated interventions rarely compensate for basic health habits like good sleep, balanced diet, and exercise.
The same is true in operating a complex enterprise. A technical document such as ISO 55000 is largely concerned with the basics of EAM. “Assets are owned and operated to create value; decisions, plans, and activities should create alignment; and leadership and culture are crucial to competence management of the assets, according to the standard.
Attending to these issues creates a high level of assurance that a facility or system will run as intended. At SEAM Group, we often find that clients are eager to learn about the most sophisticated innovations and technologies before understanding, addressing, and mastering the basics. We regularly counsel them that those tools underperform and cause frustration without the basic aspects well established.
Law #4: Embrace the technology
Many organizations often believe that modern technology is a luxury—an avoidable expense if costs are an issue. There is a misconception that complicated operations were managed for decades through paper-and-pen logs and, later, with spreadsheets that can capture and process large amounts of data. The problem with this logic is that the asset capabilities have improved, the tolerances within which they best operate have tightened, and the interdependencies among the assets have increased that optimal performance requires a modern EAM system.
Technology appropriate to current levels of system complexity is the foundation for long-term optimal performance. Going without solid technology often costs more than the technology itself when you factor in unintended downtime, maintenance, and – occasionally but tragically – accidents and incidents.
The Path to Optimization
The following laws (numbers 5-7) set the path for asset optimization.
Law #5 – Focus on returns, not costs
It’s not uncommon to hear, “We need to reduce costs,” and, “We need to do more with less.” The problem with the actions that follow is sometimes cutting costs has expensive consequences, such as asset breakdowns and safety incidents. This is why it’s important to focus on returns, and to consider any funds to be investments instead of costs. If a project costs $250,000 or the like, think about whether or not it has a high rate of return and how that could benefit your organization in the long-term.
Law #6 – Optimize the critical path
Assets that create the most constraints are considered to have a much higher level of importance or “criticality.” The most effective enterprise asset management strategies will assign a higher priority to these type of assets in order to improve overall operations.
For example, assume a bottling facility has three machines that stamp out bottle caps compared to one machine that labels the bottles. The machines that stamp out the bottle caps can perform the work at a much faster rate than the labelling machine. However, the dependence on the labelling machine is significant, and therefore, is considered at a high criticality. The machine will be identified as a priority in an EAM strategy in order to continue operation and improve production without compromising safety.
Law #7 – Foresee the catastrophe
In a world that prizes glass-half-full thinking, it’s not easy being the person who points out all of the worst-case scenarios. And yet, that’s the charge of a good asset manager. Knowing how to keep things running requires anticipating the “rare but predictable” events that could cause extended downtime for their enterprises. Therefore, asset managers must always be assessing the system’s vulnerabilities and asking themselves, “What can go wrong? What is the likelihood of that happening? And, what are the consequences if it does happen?” The reward of mastering this science is seeing a contingency plan work well in the off chance it’s needed and seeing the system continuing to run smoothly when it could otherwise have been brought to a halt.
Reflecting on Reliability – A Core Discipline in the Performance Triad
The final laws (numbers 8 and 9) of enterprise asset management reflect on reliability, one of the three core disciplines needed to achieve the highest level of operational performance.
Law #8 – Ensure reliability or redundancy (or both)
Consider the following scenario: The Cessna 172, the most common airplane produced, has just one engine. If the engine goes out and the pilot cannot restart it, the only option he or she has is to find a safe place to make an emergency landing. Meanwhile, the Cessna 310 has two engines. If an engine goes out, the plane can continue to fly, although not as well, yet still having more options than the Cessna 172.
While unscheduled downtime in a manufacturing facility is usually not as dangerous as landing a plane, the metaphor can be used to demonstrate the eighth law of enterprise asset management. To keep running, assets on the critical path of an industrial operation must have reliability or redundancy – or both. And to decide whether reliability or redundancy or both should be applied to assets’ lifecycles, managers must calculate their failure probabilities (discussed in law #7) ahead of time.
Law #9 – Calculate coldly
Emotions and intuition all too often get in the way of rationale when it’s time to replace mature assets. We’ve seen it numerous times: managers become attached to machinery that has been part of a facility for so long, even though maintenance costs might be through the roof, it could be hampering production, or even causing a safety hazard.
The opposite situation also occurs, although less frequently, where operators get too eager to trade up a piece of machinery for the latest model, regardless of if the existing component is producing exceptionally.
Sound EAM requires cold, rational calculations about whether and when to retire an asset. Emotions should be removed from the equation, and instead performance numbers should lead decision-making regarding assets.
Improve Performance with Effective Enterprise Asset Management
Many leaders often have a false perception that both safety and operational performance can be improved with technical expertise when they must first understand and demonstrate the core principles behind EAM. When organizational leaders use and apply the nine laws of EAM across an organization, they become more strategic in decision-making and can unlock the potential for asset optimization, which can significantly improve uptime and protect employees from harm.